A massive Florida restaurant is now headed towards bankruptcy as it looks to renegotiate leases and address other long-term contracts.
Red Lobster, which started in Lakeland, Florida, in the late 1960s, is considering a Chapter 11 bankruptcy filing, according to multiple news sources.
In a Bloomberg report citing sources familiar with the discussions, the seafood chain is considering a bankruptcy filing to renegotiate ‘burdensome leases and address other long-term contracts, as well as rising labor costs’.
According to Bloomberg, the chain has been finding it difficult to make money with their current leases and labor costs.
It has also been reported by CNN they suffered a whopping $12.5 million operating loss in the fourth quarter of 2023, despite its popular endless shrimp promotion.
By filing for Chapter 11 bankruptcy, the company would stay open while it reorganizes funds to pay off existing debt over time, seeking to continue with better financial footing.
Bloomberg also reported Red Lobster is being advised by law firm King & Spalding on the subject.
Any discussions about restructuring are ongoing and no final decisions have been made about a bankruptcy filing as of April 18.
This year, Red Lobster owner Thai Union Group revealed that it intended to exit its minority investment in the sea food chain.
“The combination of Covid-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs have impacted Red Lobster, resulting in prolonged negative financial contributions to Thai Union and its shareholders,” Thiraphong Chansiri, Thai Union Group’s CEO, said in a news release.
Red Lobster brought in Jonathan Tibus as its new CEO last month, according to Fox Business.
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Other Economy News Today
An essential retailer is now making more painful closures nationwide after the giant filed for an unexpected bankruptcy in October.
Rite Aid filed a notice in the U.S. Bankruptcy Court for the District of New Jersey on April 16 seeking to close 13 additional stores located in the East and Midwest, reports TheStreet.
The notice identified six stores in Pennsylvania, three in Ohio, two in New Jersey and one each in New York and Virginia.
The additional store closures bring the amount of shuttered locations to 322 of the original 2,100 stores that were open when the company filed for Chapter 11 bankruptcy on Oct. 15, 2023.
Rite Aid, which listed $3.3 billion in debt in its petition, filed bankruptcy facing tight co from rivals including CVS, Walgreens Boots Alliance, Walmart, Costco, Amazon, and investor Mark Cuban’s CostPlus Drug.
The company was also a defendant in a civil lawsuit filed against it by the Department of Justice in March 2023.
They alleged that the chain’s pharmacists inappropriately filled opioid prescriptions, contributing to the opioid epidemic.
The bankruptcy filing provided an automatic stay of any further legal action against the debtor in the lawsuit.
Rite Aid seeks to negotiate a less expensive settlement, which could have amounted to more than $1 billion without the bankruptcy filing.
The drugstore chain has filed several notices for additional store closures since its Oct. 17 motion to reject store leases and close 154 stores.
In November and December, it filed notices to reject 55 more stores and in late December and early January, it sought another 45 closures.
The Philadelphia-based drugstore chain filed notices on April 2 to close 30 stores, April 3 to close six locations and April 9 to close 17 stores.
In California, 18 of the stores are set to be closed.
The closure list also included 13 in New York, 12 in Pennsylvania, three in New Jersey, two in Michigan, two in Ohio, and one each in Maryland, Massachusetts and Virginia.
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Also Read: Giant Restaurant Now Makes An Unexpected Closure in South Carolina
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